Hello, Got a minute?
1. Are you a member of AFCC?
AFCC (The American Fair Credit Council) is the largest trade association serving the debt settlement industry. AFCC members voluntarily agree to comply with AFCC’s strict industry standards. Any company you choose should be a member. Don’t settle for anything less!
2. How long have you been in the debt settlement business and how much debt have you settled?
Many firms out there may have flashy websites or sound professional on the phone, but you’d be surprised at their actual experience level. Many if not most, don’t even have their own marketing initiatives in place and simply buy leads from lead generation companies. In addition, certain agents you speak with may not have experience with debt settlement either and are simply professional salespeople, looking for a fast commission. If the debt settlement firm cannot provide proof of its experience, settlement history, and accreditation, you should not be working with them.
3. Are you licensed in my state?
There is legislation in a minority of states which places restrictions and requirements on any form of debt management. While the federal government in many ways regulates debt settlement in addition to state governments, it’s important that you as the consumer follow up with any firm you work with to find out if they are able to legally provide services in your state.
4. What are your fees?
Some of Debmerica’s programs are performance based, which means that our clients do not pay any fees until settlements have been negotiated on their accounts. However, if you are enrolled in one of Debtmerica, LLC’s attorney-based debt settlement programs, then Debtmerica, LLC may receive fees prior to any settlement being obtained with a creditor. The total fees for our programs range from 20% to 24% of the enrolled debt balances that are settled. Upon each account being settled, a fee will be assessed specific to that settlement and collected from the special purpose account set up specifically to facilitate the debt settlement process.
5. Will you be making monthly payments to my creditors?
Debt settlement firms do not make your monthly payments to creditors for you. Rather, any payments made to creditors are a result of negotiated lump sum settlements or in rare cases, based on a pre-negotiated settlement payment plan.
6. Who is holding my money while I’m waiting on a settlement?
Your funds should be held at a third party account, referred to by many as a “special purpose account” which is FDIC insured. This account should always be in your name with you having ultimate control over its funds regardless of the terms of your settlement program. If the debt settlement firm tells you to save money on your own, the likelihood of graduating from your program historically has proven very minimal. Any reputable debt settlement firm endorses the special purpose account as the most effective method of client savings.
7. When can I expect my first settlement?
If you make your monthly payments on time and follow your program protocol correctly, you should experience your first settlement within 4-6 months. However, settlement isn’t an exact science. If you only carry a couple very large balances, then it may take longer depending on your creditors and your monthly payment. However, you should discuss your specific situation with a certified debt specialist.
8. Can you stop my creditors from calling me?
It is impossible to stop all creditor calls.
9. Can I get sued?
Yes, this is a possibility based on the motives of each individual creditor but it is based on several factors and isn’t as cut-and-dry as one would assume. Any reputable debt settlement firm will never put you into a program that lasts over 48 months. This greatly minimizes the risk as much as possible.
10. Will this have a negative effect on my credit report?
Yes, there will be an adverse effect on your credit report while in your debt settlement program. All debt settlement programs will have a negative impact on your credit report and you should be VERY cautious of any firm that tells you to the contrary.
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AFCC’S TOP 10 FREQUENTLY ASKED QUESTIONS
AFCC (The American Fair Credit Council) wants you to understand both the potential benefits and pitfalls that may arise out of the debt settlement process and to have reasonable expectations regarding the outcome of your program. Below are the questions which AFCC has laid out on its own in its efforts to successfully guide consumers to the most favorable outcome when enrolling in a debt settlement program. We wanted to also include them for you.
1. What is the goal of a debt settlement program?
When you enroll into a debt settlement program, the goal you have set is to negotiate mutually agreeable settlements between you and your creditor(s) for payment of certain unsecured debt(s) described as Enrolled Debts. No specific results can be predicted or guaranteed.
2. What are my responsibilities once I enroll in a debt settlement program?
After saving sufficient funds, you will be responsible for controlling the fund settlements that your debt settlement company will endeavor to negotiate on your behalf. You, and only you, will be in control of all settlement funds. Under no circumstances will your debt settlement company have custody or control of the funds you set aside to fund debt settlements.
3. How much will I be expected to save towards my debt settlements?
The savings plan you are expected to follow will be detailed in your Client Agreement. Summaries of the total settlement amount, monthly savings, and the period needed to reach your goal will be prepared based on the goal you select. Those summaries reflect the minimum amount that your debt settlement company has estimated you will need to save to put yourself in a position to reach your goals and come up with some debt remedy solutions. Actual settlement amounts, necessary savings and the period required to reach your goal may vary based on creditors actions and other factors.
4. Will all of my creditors and collectors negotiate with debt settlement companies?
Most creditors and collectors negotiate with debt settlement service providers. Debt settlement companies cannot force the negotiations and cannot force creditors to accept a settlement. Debt settlement companies do not make regular monthly payments to your creditors. Your creditors may continue collection efforts on delinquent accounts while you are enrolled in a debt settlement program. Such collection efforts can include phone calls and letters to you, charging off the account, sending accounts to collection agencies or attorneys, lawsuits and even garnishments of your wages if a judgment has been obtained. Debt settlement companies should not claim that they will be able to stop these collection activities as these activities may continue while the company is making its best efforts to negotiate your debt.
5. How long does a debt settlement program last?
Debt settlement programs assume an effort that will continue for many months. The time needed to produce a settlement depends on a number of factors. These may include: (a) your financial hardship, (b) the age and balance of the accounts that you owe your creditors, c) the funds you have available to pay for a settlement and (d) the willingness of individual creditors to enter into debt settlement negotiations. While no guarantees can be given, generally the quicker you save money the sooner you will be in a position to reach your goals. Increased savings will provide you with the option to accept lesser discounts and will also enable you to accumulate funds to reach your debt settlement goals more quickly. However, any settlement must be acceptable to both you and your settling creditor.
6. What do the debt settlement company’s fees cover?
The fees paid to debt settlement companies are intended to compensate the company for its efforts and will only be refundable to the extent they have not been deemed to have been earned in the manner described in the Client Agreement. Debt settlement program fees are not being set aside or held in escrow to fund debt settlements.
7. When does the debt settlement company communicate with my creditors?
Communications with the creditors are handled on a case by case basis. In some instances creditors may not be contacted until several months after you enroll.
8. What is debt settlement?
Debt settlement companies provide consumers with a method of debt resolution known as debt settlement. Debt settlement is an aggressive method of debt management that depends on the negotiation of mutually agreeable settlements between the consumers and the creditors.
9. Is the amount I save on each of my settlements taxable?
When your creditor settles your debt, a savings of $600 or more off what you owed may be reported by your creditor to the IRS as Discharge of Indebtedness income. You may wish to consult your tax advisor to determine whether your individual circumstances may permit you to exclude any such Discharge of Indebtedness Income from your reportable income due to insolvency. For more information on tax ramifications to you personally you may also wish to consult a CPA or Tax Attorney and to refer to the IRS website www.irs.gov IRS Publication 908- “Bankruptcy Tax Guide” and IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness available on the IRS website.
10. Can a debt settlement company provide legal advice?
No, debt settlement companies are not law firms and cannot provide legal advice.
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Blog last updated on 08/16/2020
Reference link for the information posted here
https://www.debtmerica.com/debt-settlement-faq/
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